Age sets the limit, not income and not the size of the house on its own. A 62-year-old in a $2 million Takapuna home can borrow a smaller share than an 85-year-old in a $600,000 unit in Glenfield, because the lender expects the younger borrower’s loan to run for decades and compound the whole way.
Here is how the limits work, what they look like on real Auckland house values, and why the maximum is rarely the right amount.
Borrowing Limits Rise With Age
Heartland uses a formula: the age of the youngest borrower minus 40, as a percentage of the home’s value, capped at 50 percent. So 20 percent at 60, 30 percent at 70, 40 percent at 80, 50 percent at 90.
SBS Unwind publishes a lower starting point of around 10 percent at 60, rising to about 30 percent at 80, with the same 50 percent cap. SBS also notes that you may be able to borrow more over time if the property value rises.
Both are maximums. The lender’s credit assessment, the valuation, the property type and the location can all bring the available figure down.
A Table Of Typical Limits By Age
| Age of youngest borrower | Heartland maximum | SBS Unwind maximum (approx.) |
|---|---|---|
| 60 | 20% | 10% |
| 65 | 25% | about 15% |
| 70 | 30% | about 20% |
| 75 | 35% | about 25% |
| 80 | 40% | 30% |
| 85 | 45% | case by case |
| 90 and over | 50% | up to 50% |
On an $850,000 house, that is $170,000 at 60 from Heartland and $340,000 at 80. For a couple, use the younger partner’s age.
Heartland’s Secondary Property Loan, for a rental or holiday home, applies a lower limit than the standard table. Choosing equity protection also reduces the limit, which the next section explains.
Why Lenders Cap It Well Below The Home’s Value
The no negative equity guarantee is the reason. Both lenders promise that the loan will never exceed what the home sells for, which means the lender carries the risk if compounding interest outruns house prices over a long period.
To keep that promise safely, they lend a small share to young borrowers and a larger share as borrowers age. Heartland’s book shows this working: its weighted average initial loan is around 8.5 percent of property value, and its average current loan across all borrowers is about 27 percent. Most people borrow far below the cap, and the loans still grow to a meaningful share of the home over time.
Lump Sum, Drawdown Or Monthly: Which Uses Less Equity
The limit is the ceiling on what you can have approved. How you draw it changes what it costs.
Take a 72-year-old with a $900,000 home and a Heartland limit of $288,000, who decides to use $100,000 over the next few years.
- $100,000 lump sum at settlement. After ten years at 8.25 percent, the balance is about $228,000.
- $40,000 at settlement, then $20,000 a year for three years from a Flexi Reserve. The same $100,000 drawn, but the later amounts have had less time to compound. The ten-year balance is roughly $195,000.
- $850 a month as a monthly advance for ten years. About $102,000 drawn in total, and the balance after ten years is in the region of $155,000, because most of the money has only recently started accruing interest.
Same money, three very different outcomes. The reserve and the monthly advance both carry small fees at Heartland (a $120 establishment fee for the monthly advance; Flexi Reserve draws are free), which are trivial against the interest saved.
Topping Up Later
You can apply for a further advance later if your needs change and the lender’s criteria at that time allow it. Heartland charges a further advance fee of $455 and will look at the balance owing, the current value of the property and your age at that point. Because the limit rises with age, a client who borrowed 25 percent at 65 may find the available percentage has risen to 35 percent by 75, which allows a top-up even though the original loan has grown.
A reserve set up at the start is cheaper and simpler than a further advance later, so if there is a reasonable chance you will need more, build it in.
Working Out A Sensible Amount Rather Than The Maximum
The question I ask every client is not “how much can you get?” but “what is the smallest amount that solves the problem, and how slowly can you draw it?”
Heartland’s own material says the same thing in its own words: borrow only what you need, because drawing most of the available funds at the start reduces the equity in the property in the future.
A sensible amount usually looks like this: enough at settlement for the immediate job, a reserve for the next few years’ unknowns, and nothing drawn for things you could fund another way. If you want a projection of what a particular structure does to your equity over five, ten and fifteen years, that is what I prepare for every client before they decide. Book a chat, or try the reverse mortgage calculator first with your own numbers.
